Correlation Between Dow Jones and Lifex Income
Can any of the company-specific risk be diversified away by investing in both Dow Jones and Lifex Income at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dow Jones and Lifex Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Lifex Income, you can compare the effects of market volatilities on Dow Jones and Lifex Income and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dow Jones with a short position of Lifex Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Lifex Income.
Diversification Opportunities for Dow Jones and Lifex Income
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dow and Lifex is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and Lifex Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Income and Dow Jones is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dow Jones Industrial are associated (or correlated) with Lifex Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Income has no effect on the direction of Dow Jones i.e., Dow Jones and Lifex Income go up and down completely randomly.
Pair Corralation between Dow Jones and Lifex Income
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 1.0 times more return on investment than Lifex Income. However, Dow Jones is 1.0 times more volatile than Lifex Income. It trades about 0.16 of its potential returns per unit of risk. Lifex Income is currently generating about -0.11 per unit of risk. If you would invest 4,109,677 in Dow Jones Industrial on September 12, 2024 and sell it today you would earn a total of 315,106 from holding Dow Jones Industrial or generate 7.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Lifex Income
Performance |
| Timeline |
Dow Jones and Lifex Income Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Lifex Income
Pair trading matchups for Lifex Income
Pair Trading with Dow Jones and Lifex Income
The main advantage of trading using opposite Dow Jones and Lifex Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, Lifex Income can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lifex Income will offset losses from the drop in Lifex Income's long position.| Dow Jones vs. Aeye Inc | Dow Jones vs. Gentex | Dow Jones vs. Marine Products | Dow Jones vs. CarsalesCom Ltd ADR |
| Lifex Income vs. Siit Emerging Markets | Lifex Income vs. Barings Emerging Markets | Lifex Income vs. Rbc Emerging Markets | Lifex Income vs. Kinetics Market Opportunities |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |